Net migration is having a huge effect on the New Zealand economy prompting debate and leading to policy changes. We’ve curated a list of the top ten things to know about migration in New Zealand.

1. Population growth is at its highest since the 1970s.

Net migration has been a powerful boost to New Zealand’s population in recent years. Back in June 2012, we were losing just over 3,000 people a year (mostly due to New Zealand citizens moving to Australia). Fast forward five years and we are gaining people at a rate of 72,305 every 12 months. This turnaround has pushed population growth to 2.14%pa – its fastest pace since 1974!

Population growth has been driven by both strong arrivals growth and low departure numbers. Over the year to June 2016, the number of people moving to New Zealand was 49% higher than in June 2013. Our buoyant economy, strong employment growth, and relatively accommodative migration policies have been big pull factors for migrants. These conditions, coupled with a clampdown on rights to social security services in Australia, have also encouraged more New Zealanders to stay on this side of the Ditch.

2. New Zealanders play a big role in net migration statistics.

Over the last three decades, the number of New Zealand citizen departures has varied between 25,000 and 60,000 a year. These figures mean that, typically, New Zealand citizens account for about 50% of total departures. But at around 33,000 departures in the year to June 2017, New Zealand citizen departures are at their lowest level since the early 1990s!

On the arrivals side, the number of New Zealand citizens coming in is at its highest level since at least the 1980s! And New Zealand citizen arrivals numbers are still climbing.

Conditions offshore make moving or remaining overseas look a lot less appealing than it once was. The New Zealand economy is in a strong growth position and is not faced with the political uncertainties or economic struggles that many countries are dealing with right now.

3. Students might be our future residents.

Growth in student arrivals was integral to the initial lift in net migration back in 2013 and 2014. A rule change enabling students to work more while studying in New Zealand, along with a push from developing countries to promote a foreign education (eg in New Zealand) prompted a surge in student arrivals. In the March 2015 year, student arrivals had grown 52% - equivalent to more than 8,600 additional arrivals.

At the time, we cautioned that this lift in arrivals was unlikely to have the same effect on migration as a lift in resident arrivals. For the most part students weren’t expected to stay longer than the duration of their courses, and they weren’t expected to put down roots by buying a house. But we might have been wrong.

Although we do not have the data to confirm that migrants have used student visas as a “back-door” way to obtain residency, we are suspicious of the similar rise in resident visa applications that follows about a year after increases in student arrivals.

However, there has been a tightening of student visa requirements that has subsequently prevented a lot of would-be students from coming to New Zealand. In the year to June 2017, there were 23,983 people who arrived on student visas, with this number having declined 15% from its peak in early 2016. The slowdown was largely due to a tightening of English language testing requirements, targeting students with passports from countries who had previously low approval ratings.

The recent boom in tourism could also provide additional impetus to population growth. Recent data from Statistics NZ shows that in the year to March 2015, an additional 15,000 tourists stayed in New Zealand long enough to be reclassified as permanent or long-term migrants. The data suggests that when the economy is hot, tourists tend to stay on in New Zealand as either students or workers.

Given our recent economic performance, the number of tourists staying in New Zealand for a longer period is likely to rise further.

The full effects of rule changes to work and resident visas introduced in April are unlikely to show up in the migration statistics we normally look at. The new rules introduce remuneration thresholds for those wanting residency under the Skilled Migrant category and for those wanting to extend or reapply for their three-year Essential Skills work visa.

Both changes affect those wanting to stay in New Zealand long-term, and applicants are by-and-large already in the country. As a result, these rule changes will not create a sharp drop in at-the-gate arrivals, but are likely to force more people to leave New Zealand over time.

But the point of these rule changes is to concentrate the mix of migrants staying here long-term toward higher skill levels, with the intent of improving overall labour productivity and living standards in New Zealand.

Migrant networks are an important factor when foreign immigrants are choosing where to settle in New Zealand, despite this country’s skills-focused migration system. Labour market opportunities become a more important factor the longer that the migrants have been in New Zealand.

On average, 56% of foreign migrants (excluding New Zealanders and Australians) over the last 25 years have said they plan to settle in Auckland, which is an average of 23 percentage points above the region’s share of New Zealand’s population. In this regard, the fact that Auckland has a high proportion of immigrants potentially becomes self-reinforcing, placing stress on the region’s housing market, civil infrastructure, and education and health services.

Migrants to New Zealand face an initial entry disadvantage in terms of both their employment rates and wage rates compared with equivalent New Zealand-born workers. This disadvantage reduces over time for some immigrants. Less-skilled migrants tend to suffer continued lower employment and wage rates than comparable NZ-born workers, but these labour outcomes are still likely to be superior to the opportunities available in these migrants’ home countries.

The implied boost by migrants living and buying things in New Zealand appears to improve employment and wage rates for NZ-born workers, particularly those in the medium-skill subgroup.

Furthermore, there is no evidence that the increase in temporary migrants over the last 15 years has had a negative effect on labour market outcomes of New Zealanders. This conclusion continued to hold true in the wake of the GFC when the labour market softened but there was less downward adjustment in the employment of temporary migrants.

9. Research on the effects of migration on the New Zealand housing market is mixed.

A lift in migration flows equivalent to 1% of the population could push up average house prices by between 6% and 12%, with the effects of an increase in arrivals greater than an equivalent decrease in departures. Returning New Zealanders have a greater effect on house prices than changes in the number of foreign immigrants. However, regional analysis suggests that much of the correlation between net migration and house price movements might be caused by other factors (such as economic growth or income growth), rather than there being a strong causal relationship between migration and house prices.

A lift in net migration might have a large positive effect on house prices in the short or medium-term due to delays in the response of the residential construction sector to increased demand for housing and/or more optimistic expectations about future property values. In our view, a lack of capacity in the construction sector because of very low levels of activity following the Global Financial Crisis suggests that the relatively limited response in residential building has been a significant factor in the house price boom of the last five years.

10. Simply “turning the tap off” will rupture the mains.

Although migration is helping to alleviate pressure in the labour market, it faces political headwinds. The rapid build-up in migrant inflows has put pressure on housing and infrastructure.

Migration’s effect on cost pressures can be seen in limited wage and price growth. But a sharp reduction in net migration probably won’t lead to as much of a lift in wage growth (or employment) as you’d think it might. If faced with rapidly increasing labour costs, businesses are likely to turn to automating processes as much as possible. We don’t think that automation is inherently a bad thing – improving productivity is one way to get more for your money – but we do think that “turning the tap off” on net migration will impose sharp disruptive change for many parts of the economy. As a result, we suggest a more progressive approach to toning down net migration, and to focus migration policy on those that are intending to stay in New Zealand long-term through indirectly or directly obtaining residency.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

69 Comments

Well that makes sense. Which seems rare for reports on immigration. The key statement is ""There is little evidence that New Zealand’s skills-based immigration policy of the last 25 years has led to improved productivity or living standards across the economy"" which is supported by all the NZ data.
So those who argue that immigration is good for us economically are quite simply wrong.
Immigration increases demand temporarily which makes the economy look good so politicians like it.

I hope this is now accepted and the debate will move to:-
a) a population plan that can be discussed publicly
b) the non-economic (social) benefits of immigration
c) why immigration has failed in NZ and how it could be changed so it is successful for all of us.

And quick answers:
1. I would prefer a low population but many disagree.
2. New food and art and philosophy are great but you only need one chef per cuisine not the over 600 each and every year
3. It is too low-skilled and getting lower; the last immigrants I've meet (besides myself and family) assembled a new bed, twisted cables in a manhole, worked at our local petrol station, served me a coffee. All decent people but not doing anything vital for NZ - I would like to see professors, surgeons, chief engineers and therefore basically people earning over $150,000 minimum.

I have recently been over seas and feedback from people i met was that a primary point of attraction for the rest of the world is our low population density, something that cannot last if the current policies continue. As we have seen immigration without some commensurate lift in export income, productivity only has a nett negative effect on the country - increased demands on limited resources and therefore increased costs. Trouble is the Pollies don't want to acknowledge this, so won't change significantly in the near term.

Lapun - who is going to do these low-skilled jobs of assembling a new bed, twisting cables in a manhole, at the local fuel station and serving you coffee? You might not see these jobs as vital but that is more your personal view. At the end of the day the world needs people who can do these jobs. I think it is very patronising and derogatory to think that people who do these jobs are not a vital part of the economy. The people on your preferred list all use all those goods and services......the fuel the coffee, something to sleep, the cable that transfer whatever is being sent down them etc. In the majority of cases it is the low-skilled who are generating the tax revenue for your preferred people's salaries!

Yes every job needs someone to do it. The same tasks and jobs exist in China, Japan, Taiwan, Iceland, Finland, etc but those countries can find people to do them. never forget one in eight young Kiwis are underemployed.
And apologies for sounding like a snob - in my time I have cleaned toilets, loaded barrows, cleaned chimneys and they were all jobs that needed doing. I should have mentioned that it is partly due to the large numbers of recent immigrants that my Auckland property has gone up in value and I can now afford to buy coffees. Yes good for me but would you say good for New Zealand?

Lapun, why should we care what you think? You've immigrated to NZ, now you want to slam the door on any other hopeful. What do you earn? What is your skill base? Is it one of the jobs you've named? Have you put a hard working Kiwi family out of a home because you've bought a house or two? Why are you special? I've spoken to four immigrants today, one is a senior manager in a very prestigious company. The other a vital cog and an expert in his field that no Kiwi can fill, Aussies desperate to have him and will more than double his pretty good salary (not over your ridiculous 150k idea), but will be substantially more if he takes it. The third is training in a very specialist role and his responsible for hundreds of lives. The fourth is filling a massive gap in a collapsing government organisation, because the young ones are packing up and moving overseas to work in the same Aussie government department over there and making BIG money.
Your comment is very arrogant and not too dissimilar than the ones coming from eco bird/tothepoint and Zac/Double GZ.. I am shaking my head at you right now.

You have an argument. I arrived and was proud to be doing a senior IT job they could find no Kiwi (it was advertised). With time my opinion has changed - I still love being in NZ - but now I realise that I had met many good Kiwi IT professionals when working abroad - if salaries were decent they would have been back in NZ; if on the job training existed in NZ I would not have been needed.
These top immigrants you have meet today - why aren't they being paid the international rate of pay - why are you happy they are importing lower wages? I chose $150,000 because the average IT job at Auckland council is over $100,000 and the average IT person is usually rubbish.

why aren't they on your magical make all good 150k salary? Because they are contributing to their new country. They are here as new Kiwis, not just to bludgeon a salary and feel superior. They contribute to the communities they live in, educate our children, stand in defence of you as you sleep at night. They work hard, pay their taxes, don't break the law and they give their money and time to NZ charities and other good causes. They may speak slightly different, but they are bright and shiny new New Zealanders. What do you do? Or do you still call South Africa, still call Australia, still call Great Britain home?

Retired now. UK Pension. I have absolutely no problem with any immigrant New Zealander - all of us immigrants are happy and proud to be Kiwis and the handful who aren't return home. And I like all the accents too - very easy to find us in Auckland North Shore. The issue is how wide open do you want the immigration door and do the immigrants make NZ better economically and/or socially? I would like it shut just to be similar to most other countries. That was just one suggestion - what do you recommend? But please think about the unemployed Kiwis; especially the children of immigrants like mine who are looking for work.

"" two faced and arrogant?"" I'd prefer you thought I was like an AA member warning you about the dangers of alcohol.

And thinking about it this is another one of those occasions where a little does you good and too much is dangerous. How can you tell what is too much - when you are downing your 12th beer and your friends are on their 3rd. And for per capita immigration that is the ratio for NZ to an average country - while Australia is on their 6th and the USA on their 4th.

I agree with your beer analogy, it is a good one too and I shall use it. But your scale of selection is way off and I guess that's what I find arrogant. From personal observation and likes of your comments, it is the middle, middle class that make the best immigrants. You know, the ones earning between 60k and 100k. They are usually educated and aspire for more, they work hard and become part of the fabric of their new country's tapestry. People who come for the money, generally not so, they tend to be mercenary in their country selection and when the Aussies offer 200k and a back scrub, they are off like a robbers dog. So the two faced charge, I find it difficult to reconcile that one can come to NZ and then want to shut the door on anyone else you feel is inferior to you, because of the money you make.

What you say about middle class makes sense. Did you know the dept of stats took a sample of 600 recent permanent residents and discovered their average salary was a few thousand below the NZ average - considering how disproportionally they live in Auckland that was a surprise. The point is along with the very well paid experts that I admire and above average pay middle class that you admire (and I used to be) there are a massive number of low paid low skilled immigrants. I meet them everyday and as I say they are pleasant good people (how do you judge inferior/superior?) but we are allowing far too many in for the good of NZ. Of course it is usually to the good of the immigrant.

good grief, think outside the box for awhile... look at jobs in the Aussie Govt/States that Kiwis can apply for. I'm not going to do all your thinking for you... and when you work it out, I'd like an apology please.

good grief, think outside the box for awhile... look at jobs in the Aussie Govt/States that Kiwis can apply for. I'm not going to do all your thinking for you... and when you work it out, I'd like an apology please.

Oh good grief, think outside the box for awhile... look at jobs in the Aussie Govt/States that Kiwis can apply for. I'm not going to do all your thinking for you... and when you work it out, I'd like an apology please.

Well yes, although it's highly likely that the UK will offer more favourable migrant/visa terms with NZ after Brexit and this will go along with the politics and glad handing whilst UK/NZ thrash out their trade deal.

At the moment NZD/GBP is looking great for Kiwis too and let's not forget how cheap everything is in the UK compared to the NZ. Young adults with disposable incomes are still going to be attracted to that.

I just got back from the UK. I went with 2 empty suitcases and returned with maximum capacity weight in both! Incredibly how much better quality and more affordable clothes, shoes, toiletries etc are there.

I have thought for some years the only solution is to turn the migration spigot off altogether until the deficits in housing and infrastructure have been caught up. Frequently I published this view here on interest.co.nz 5 years ago to no avail. Never gained any traction. Now everyone can see the results of inertia and doing nothing. The problem is much worse today than it was 5 years ago. And, we knew it was a serious problem 6 years ago

Now more convinced than ever after reading the following article about the construction industry by John Beveridge, a former chief executive of Placemakers, a division of Fletcher Building

extract - "the construction and building industry is still using techniques and materials almost unchanged in the last 50 years. According to a global study by the World Economic Forum, what took three workers to build back in the 1960s now takes five"

I wouldn't put it to total off just in case I need some surgery that only a potential immigrant knows how to do. However I agree with you say 99.5%. Note that stopping immediately is impossible because:
1. Partners of Kiwis - if a citizen marries a foreigner and they have children born in NZ it is only right for an honest healthy partner to be allowed in. That is over 13,000 now. However citizenship could take longer to achieve and that would partly stem the flow.
2. Refugees - we take 750 and are increasing this to 1000 next year. I cannot find any data other than numbers for refugees. Personally I am in favour of spending the money but have grave doubts whether it is best spent ($100,000 per refugee at present) wisely and in particular is the UH just dumping bad people on us (for example the refugee now NZ citizen that Australia wants to put on trial for the deaths of hundreds of boat people). If any reader of this post knows of a site that details who exactly we are getting and why them and not others I would be interested.
3. Pacific island humanitarian quotas - these may be tied to international agreements - does anyone know?

Five years ago turning the spigot to dead-slow a trickle would have been an appropriate policy response.

Now it is beyond repair. They are not being assimilated - as you have noted before

If you are driving your car and you get 2 flat tires you can keep driving. If your engine throws a conrod you can keep driving but the performance will be seriously compromised and you will be able to keep driving for a while but at some heavy eventual cost. The longer you keep driving the higher the cost of fixing the damage

There will always be some flow both ways over the borders Lapun. Relationships are big deal. We do indeed need some skills. Genuine Refugees are a humanitarian necessity. ( note Genuine ).
But it's still possible to achieve a stable non increasing population. New Zealanders also flow out, some briefly and some forever. An effective health system needs to have cross border flows of skill and personnel - both ways.
But a stable population is the way forward to prosperity and ensuring long term human survival. ( translation - lets be rich and the same for our descendants thousands of years from now).

Totally agree about relationships - if fact critical to my family. The uncapped category is increasing from about 9,000 to about 13,000 - Infometrics believe it is related to our unusually high immigration but it could just be Pakeha Kiwis meeting asians while on OE. I mentioned it because NZF promise 10,000 total for all immigrants.

Refugees is a large issue. Since we get our refugee immigrants from refugee camps strictly they are not a necessity - instead of taking one we could feed a dozen in the camp. But that is not my issue - my concern are the Yazidis, Baha'is and Ahmadiyyas who are frequently frightened out of the UN refugee camps. Relevant to this post they are fairly insignificant just mentioned as being a reason for say 20,000 being a possible target but 10,000 is impossible.

I'd be happy to vote for your stable population. Which political party has it as a policy?

Iconoclast - extract - ""the construction and building industry is still using techniques and materials almost unchanged in the last 50 years. According to a global study by the World Economic Forum, what took three workers to build back in the 1960s now takes five"...........

This needs explaining further by WEF!

Surely the problem is one of bureaucracy, compliance and red-tape rather than the physical on-site labour.

Great link - mandatory reading. Are you sure I never supported your views 5 years ago? I do enjoy looking back at comments made years ago - shame we can't track ourselves in that way on here. It might well humble us a bit :-).

There are many different channels through which 100s of 1000s of non-NZers are staying in NZ for longer periods. Many eventually staying permanently. The official immigration figures cover only a percentage.

Don't worry about what the months immigrant total is. Worry about what the total population should be now, next year, ten years from now and one hundred years from now.
Yet again. I propose a desirable population for New Zealand is two million. I would settle for five if that was the democratic deal.

While I have a lot of respect for the Japanese, they have some very serious issues trying to maintain that population. Most of their food, energy and raw materials are imported, the UK is similar. It's all very well while you have strong demand for your goods and services but the need for a large global footprint does create a vulnerability and some powerful incentives towards empire building and war.
Japan is (very sensibly) allowing it's population to decline and not falling for this immigration nonsense. The real nightmare is sub Saharan Africa (and The ME) as the hoped for population stability now looks further away than ever. The overflow has started invading Western Europe with God only knows what consequences.

Student migrants are the low wage slaves for keeping the economy chugging along, and there is bound to be competition in that slot, with more migrants coming in, to study, visit and stay back. No surprise they elect to settle near their friends and countrymen, who all mostly prefer the Auckland region. Unless there is targeted intervention in who comes in, where they go and where they stay, Auckland will continue to be screwed for decades to come..

Once Redcliffs was an unprepossessing fishing village, distinguished by a collection of modest fishermen's cottages. Most have now disappeared, replaced by more luxurious residences, and property values have escalated.

“It's a standing joke that we're being taken over by the Americans and British, who have taken advantage of the stronger property markets in their own countires and favourable exchange rates”

“I know an English couple who have summer here and go back to England in the winter”

“What other parts of the city have such nice walks?..…

From a local newspaper.
The modest fishermen's cottages were where people of modest means spent their weekends.

The changes to the New Zealand way of life, our culture are rarely discussed; it's like we don't matter. The people of Western Europe are becoming very concerned and divisions are appearing with many of the young people now actively opposing inward immigration. The Eastern Europeans have just said straight out NO (their history under the hideous Ottoman empire no doubt giving some steel to their spines in that regard).
Here is an article and video clip about a growing pan European organisation dedicated to the preservation of European civilisation. The Identitarians: Young, Hip and Far Right. http://www.dw.com/en/identitarian-movement-germanys-new-right-hipsters/a...https://www.youtube.com/watch?v=TxrTD2PKG0k

Don't worry guys, the epic housing market crash is going to trigger a deep depression, the migrants will greatly reduce, young NZ-ers will start leaving again in droves and house prices will become affordable. All the problems cured in one fell swoop.

Checked my house value in Wellington today and it has dropped 14% in 3 months. Houses in my affluent neighbourhood are going up for sale this month below the lowest trademe estimate of value.

And this is what happens when you have a government do F#%k all in the face of growing social problems for a decade. A horrible, painful period is looming. Please let's not forget who to blame.

I'm curious about migrant workers not having any effect on wages / opportunities for local workers. Is this a negligible effect when spread against the entire population, but more pronounced in certain industries? E.g. can it really be said migrant workers have no effect on wages for chefs, or for farm workers? Restaurateurs themselves cry foul and that Kiwis will have to pay more to eat out if visa conditions are changed.

I think so Rick -immigrant workers can supply some workplaces but those immigrants then induce more demand elsewhere -more cars are bought, households are set up -with all the demand for furniture, whiteware etc. Economists say in the short to medium term the demand effects are greater than the supply effects.

The article seems to have been cobbled together from various bits and pieces - it's a bit bi-polar Rick.
#10 says "Migration’s effect on cost pressures can be seen in limited wage and price growth" and common sense will tell you that increasing the supply (labour) will reduce the price (wages) Some of these immigration spruiking outfits try and assert because we haven't had outright wage deflation the settings are apparently OK; ignoring the counterfactual that they should be a hell of a lot higher and more like Australia's with whom we share a common labour market. They do concede that a smaller pool of labour incentivises productivity gains and therefore raises living standards though. So why aren't we doing that - sounds good to me.

I was reading a thread on reddit Australia the other day, where people were giving advice about cheffing as a career. The consensus was that for an experienced chef, capable of running a kitchen, the wage used to be 55 or 60K, and that the job, while hard work, was worth doing if you had a passion for it.

Now with the market flooded with chefs on 457 visas, the wage has dropped by 10 or 15K and is not worth doing.

Yeah...would suggest that an economic analysis that says it has little adverse affect on wages or jobs across 4 million people as a whole only tells half the story, the other half being that it really undermines the viability of some particular professions, which become reliant instead on a package that includes not only the salary (itself less than in the past) but the extra virtual subsidy of a path to residency thrown in.

RE: "In our view, a lack of capacity in the construction sector because of very low levels of activity following the Global Financial Crisis suggests that the relatively limited response in residential building has been a significant factor in the house price boom of the last five years."

Davo36 -that is the point about inelastic housing supply -it is about an inelastic response to changes in demand. The concept implicitly assumes a positive demand shock and then a poor supply response. So it is about both supply and demand. Cities with falling demand -say like Detroit -supply is not a problem. Look at the supply and demand curves in the article they help to illustrate the concept.

There can be all sorts of demand shocks -fast income growth, foreign investment, lower interest rates, property speculation, population growth.......

Having 70,000 immigrants come in each year is creates a false economy!

They buy cars, mobile phones, internet services, buy houses and furniture which is great for all these industries that are all growing, but its not real growth, you are basically importing consumers. A massive reduction in immigration will be noticed.

And then on the other side they keep wages low, most contact centre jobs are being done by immigrants who will take anything they can get. Since 2001 wages for IT contact centres have increased by approximately 30%, thats about 2% per year. I wonder how much more Taxi drivers are earning since 2001?

We should bite the bullet and aim for a much lower number each year, somewhere around 20000. Then our businesses would have to work on efficiencies & pay more to their employees.

Have difficulty believing some of the claims made in items 6,8, 9 and 10. Not because I have any view on these points but there are multiple issues at play here and I struggle to believe that the research can come up with such clear cut answers.
Am personally ambivalent about immigration. There are more downsides in it for me personally but sometimes you have to put your personal situation to one side and think about what benefits the country. Not sure this post clears up much and my ambivalence means I don't have the energy to dig into the research and see if the conclusions are justifiable.
.

the Infometric's website has references to the various reports they base their analysis on - all solid research by reputable bodies such as the NZ Treasury but many several years old.

Personally immigration has been great - by accident not intention - it has made me comfortably well off in my retirement by increasing the value of Auckland property and I enjoy the local ethnic restaurants and coffee shops that are kept cheap by very competitive cheap immigrant labour. Yes it has been good for me. But I have four adult ethnic children and just in the dozen years we have been here it has become hard for them to get reasonably paid work and accommodation - they are competing with the third world wages some immigrants accept not to mention the widespread payments to employers to get the point count needed for permanent residency.

The media and politicians are scared of being called racist whenever tightening immigration controls is mentioned (ref James Shaw and his abandoning 'data evidence immigration policy' for a 'values based immigration policy'. So I end up posting to websites like this hoping to make a point about immigration numbers on one hand and beating down the small number of prejudiced Kiwis on the other (I reckon NZ is the least racist country in the world and that is despite various problems my wife has had).